ASSIGNMENT SET - 1

LC CODE NAME ROLL NO. COURSE SEMESTER SUBJECT SUBJECT CODE

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02014 Atul Upadhyay 521158436 MASTER OF BUSINESS ADMINISTRATION 3 LEGAL ASPECTS OF BUSINESS MB0051

MASTER OF BUSINESS ADMINISTRATION MBA SEMESTER 3 MB0051 LEGAL ASPECTS BUSINESS ASSIGNMENT SET 1

QUE NO. 1 2 3 4 5

QUESTION All agreements are not contracts, but all contracts are agreements. Comment. What are the essentials of a contract of sale under the sale of Goods Act, 1930? Describe the main features of Consumer Protection Act 1986. What are the duties and powers of an authorized person under FEMA, 1999? What do you mean by Memorandum of

ANSWER PAGE 3-5 6 7-8 9-10 11-12 13 14

Association? What does it contain? Write a note on the following: (a) Copy Right Act (b) Pledge

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QUESTION 1:-

All agreements are not contracts, but all contracts are agreements. Comment.

ANSWER 1:All agreements are not contracts, but all contracts are agreements For the illustration of above mentioned statement we need clear concept about contract and agreement. If we clear the concept about contract and agreement, we can easily say that, All contracts are agreement, but all agreements are not contracts. The Contract Act, 1872, provides the definition of contract. According to section 2 (h) of the Contract Act, 1872, An agreement enforceable by law is a contract. If we analyze the definition of the contract mentioned above, we get two fundamental characteristics or features, viz.i) ii) Agreement between the parties and This agreement must be enforced by law.

So agreement is the first step of contract. But after making agreement, it may be enforceable by law or may not be enforceable at law. If that agreement is enforced by law then it will be treated or turned into contract, But if the agreement is not enforced by law that will not be treated as a contract but merely an agreement. So all contracts are agreement, but all agreements are not contract. For example: - A minor X has agreed to sell an apartment that he has inherited to his father, to another person named Y. Here, this will be called agreement but not a contract. Because according to the law of contract, a minor is not capable of entering into a contract. So this agreement is not enforced by law. But from the definition of contract we know- every agreement enforced at law is a contract. So, all contracts are agreement but all agreements are not contract. Unlawful consideration may create agreement but not a contract:Section 2(e) provides that- every promise and every set of promises, forming consideration for each other, is an agreement. Apart from this, section 2(a) and 2(b) provides that When one person signifies to another his willingness to do or to abstain from doing anything, with a view to
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obtaining the assent of that other to such act or abstinence, he is said to make a proposal. And when the person to whom the proposal is made signifies his assent there to, the proposal is said to be accepted. A proposal, when accepted becomes a promise. The person who making the proposal is called- promisor and the person accepting the proposal called promise. Section 2 (d) provides the definition of consideration. According to this section the definition of consideration is as follows:When, at the desire of the promisor, the promise or any other party/person has done or abstained from doing, or does or abstains from doing, or promise to do or to abstain from doing, something such act or abstinence or promise is called a consideration for the promise. But if under section 23 of the Contract Act, such consideration is forbidden by law, if, is of such a nature that, if permitted, it would defeat the provision of any law, or, is fraudulent; or Involves or implies injury to the person or property of other, or the Courts regards it as immoral; or opposed to public policy. In these cases, the consideration or the object of the agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. So in agreement the consideration may be unlawful. But in a contract that consideration must be lawful. From this view point it can be said that- all agreement are not contract. Further more, what agreements are contracts it is said in section 10, that- All agreements are contract if they are made by the free consent of parties, competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. So one of the fundamental elements of contract is consideration and which must be lawful. In order to make a contract, the first and main step is agreement which must be constituted through lawful consideration. This agreement does not crate any duties and obligation. In order to create right, duties or obligation the following extra elements are neededi) Capacity of the parties/Competent to contract: According to section 11, every person is competent to contract who is of the age of majority according to the law to which he is subject and who is of sound mind, and is not disqualified from contracting by any law to which he is subject.

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ii)

Free consent of the parties: According to section-14, consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation and mistake. Lawful object: The object of the contract must be lawful. Object must not be illegal, immoral or opposed to public policy. Contract is not valid if it is illegal, immoral or opposed to public policy. Contract is not prohibited by law: Contract will not be prohibited by the existing law. Because such kind of contract has no/ will not have legal effect.

iii)

iv)

After the above discussion, it is found that the first and main condition of valid contract is lawful agreement. If the above mentioned elements exist in a lawful agreement, then that agreement turned into a contract. In the absence of above elements or in the presence of defective elements (i.e. unlawful consideration/unlawful object) illegal or void contract can be formed/ constituted. But illegal or void contract has no legal status/existence, they are proper to say illegal or void agreements. Finally we can say that all agreements are not contract, the agreements which are constituted under/ within the frame of the law of contract, that are treated as a contract. On the other hand, in all contracts there must be agreement as no contract can be formed without an agreement. So it can undoubtly be said that All contracts are agreement but all agreements are not contract

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QUESTION 2:-

What are the essentials of a contract of sale under the Sale of Goods Act, 1930?

ANSWER 2:Sec.4 defines a contract of sale as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. The following are the essentials of contract of sale:-

1)

There must be at least two parties. A sale has to be bilateral because the property in goods has to pass from one person to another. The seller and the buyer must be different persons. A person cannot buy his own goods. However, a part-owner may sell to another part-owner. Transfer or agreement to transfer the ownership of goods. In a contract of sale, it is the ownership that is transferred (in the case of sale), or agreed to be transferred (in the case of agreement to sell), as against transfer of mere possession or limited interest (as in the case of bailment or pledge). The subject matter of the contract must necessarily be goods. The sale of immovable property is not covered under Sale of Goods Act. The expression goods is defined in Sec.2(7). Price is the consideration of the contract of sale. The consideration in a contract of sale has necessarily to be money, (i.e., the legal tender money). If for instance, goods are offered as the consideration for goods, it will not amount to sale. It will be called a barter. Payment by installments. In the case of sale of goods, the parties may agree that the price will be payable by installments. Also, the terms may stipulate some amount by way of down payment and the balance by installments.

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QUESTION 3:Act 1986.

Describe the main features of Consumer Protection

ANSWER 3:Main Features of the Consumer Protection Act, 1986

1)

Social Welfare Law : It is a highly progressive piece of social welfare legislation. It is acclaimed as the Magna Carta of Indian consumers. This is a unique law which directly pertains to consumers in the market place and seeks to redress complaints arising there from. Comprehensive Provisions and Effective Safeguards: Its provisions are very comprehensive. It provides effective safeguards to the consumers against various types of exploitation and unfair trade practices. In fact, it provides more effective protection to consumers than any other law in India. Special Consumer Courts: The Consumer Protection Act has created special consumer courts for enforcement of the rights of consumers. Three-Tier Grievance Redressal Machinery: The Consumer Protection Act provides for a three-tier consumer grievance redressal machinery District Forums at the base, the State Commission at the middle level and the National Commission at the apex level. The redressal machinery is quasi-judicial in nature. Simple and Inexpensive : There are no complicated or elaborate procedures or other technicalities. The redressal machinery is merely to observe the principles of natural justice. No court fee any other charge is to be paid by the complainant. It is not mandatory to employ any advocate. The complainant can write his grievance- on a simple paper along with the name and address of the opposite party against whom the complaint is made. Thus, the consumer protection Act provides a simple, convenient and inexpensive redressal of consumer grievances. Covers Goods and Services : The Consumer Protection Act covers both goods and services rendered for consideration by any person or organization including public sector undertakings and Government agencies. However, services rendered free of charge or under any contract of personal service are excluded. All suppliers of goods and services in private, public and cooperative sectors are covered under the Act.

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7)

Time Frame : The Consumer Protection Act lays down time limits for the disposal of cases so as to provide speedy redressal of grievances. Class Action : The Consumer Protection Act allows filing of class action complaints on behalf of groups of consumers having common interest. Check on Unfair Trade Practices : The Consumer Protection Act also covers complaints relating to unfair trade practices. Thus, a consumer can protect against food adulteration, short weighting and overcharging, directly to the District Forums. The consumer can pick up a food sample from a shop, get it analyzed by a chemist and file a complaint on that basis. Check on Overcharging : The Consumer Protection Act also provides for complaints against charging in excess of the price of a product fixed by a law or rule and/or displayed on the packaged commodities

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QUESTION 4:-

What are the duties and powers of an authorized person under FEMA, 1999?

ANSWER 4:Duties and Power of an Authorized Person under FEMA, 1999:Authorized Person:Sec.10 provides that the Reserve Bank may, on an application made to it in this behalf, authorize any person to be known as authorized person to deal in foreign exchange or in foreign securities, as an authorized dealer, money changer or offshore banking unit or in any other manner as it deems fit. The authorization shall be in writing and shall be subject to the conditions laid down therein. An authorization so granted may be revoked by the Reserve Bank at any time if it is satisfied that (a) it is in public interest to do so; or (b) the authorized person has failed to comply with the condition subject to which the authorization was granted or has contravened any of the provisions of the Act or any rule, regulation, notification, direction or order made thereunder. Duties of an authorized person The duties of an authorized person as provided in the Act are summarized hereunder:

i)

To comply with RBI directions [Sec.10(4)]. An authorized person shall, in all his dealings in foreign exchange or foreign security, comply with such general or special direction or order as the Reserve Bank may, from time to time, think fit to give. Not to engage in unauthorized transactions [Sec.10(4)]. Except with the previous permission of the Reserve Bank, an authorized person shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of authorization under this section. To ensure compliance of FEMA provisions [Sec.10(5)]. An authorized person shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information, as will reasonably satisfy him that the transaction will not involve and is not designed for the purpose of any contravention or evasion of the provisions of this Act or of any rule, regulation, notification, direction or order made thereunder. Where
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ii)

iii)

the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorized person shall refuse in writing to undertake the transactions and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank. Powers of the authorized person i) ii) To deal in or transfer any foreign exchange or foreign security to any person [Sec.3(a)] Receive any payment by order or on behalf of any person resident outside India in any name. [Sec.3(c)] However, an authorized person is not allowed to credit the account of any person without any corresponding remittance from any place outside India. To open NRO, NRE, NRNR, NRSR and FCNR accounts. To sell or purchase foreign exchange for current account transactions. [Sec.5] To sell or purchase foreign exchange for permissible capital account transactions. [Sec.6].

iii) iv) v)

Banks powers to issue directions to authorized persons (SEC.11) The Reserve Bank may, for the purpose of securing compliance with the provisions of this Act and of any rules, regulations, notifications or directions made thereunder, give to the authorized persons any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security.

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QUESTION 5:-

What do you mean by Memorandum of Association? What does it contain?

ANSWER 5:Memorandum of Association Memorandum of Association is the fundamental charter which defines the aims and objectives of a company. It contains fundamental rule regarding the constitution and the activities of a company. It is the most significant document on which the super-structure of the company is raised. It sets out the limits with in which the company may function and defines the relations of the company with the outside world. Any action beyond the scope of the memorandum of association is void. The memorandum of association contains the following:

Name clause: This clause contains the name of the company. The word limited is used after the name of a public limited company and private limited is used after the name of a private company. The name of the company should not be identical to the name of an existing company. The words like Royal, King, Imperials, Emperor and the words of patronage of the central government is not used in company. Object clause: This is an important clause of the memorandum of association which states the objects with which the company has been established. Any action beyond the stated objective is ultra vires and as such a great deal of care will be taken in drawing up this clause. It contains the broad objective along with subsidiary objectives. Situation clause: This clause states the place at which the registered office will be situated. This clause is vital for determination of jurisdiction of the court for legal matters. The place of registered office should be intimated to the register within 30 days incorporation. Capital clause: This clause states the amount of authorized capital with which a company is registered. The division of share capital into different shares must be stated in the capital clause. The face value of the share will be stated in this clause. This clause gives an idea of exact capital structure of the company. Liability clause: This clause states that the liability of the shareholders is limited to the extent of the face value of shares. A company limited by guarantee should specify the amount of guarantee.
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Association clause: This clause states the names and addresses of the signatories of the memorandum of association and articles of association. Each subscriber is required to take at least one share in the company. The memorandum of association is signed by at least seven persons in case of public limited company and at least by two persons in case of private company.

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QUESTION 6:-

Write a note on the following: (a) (b) Copyright Act Pledge

ANSWER 6:-

(a)

Copyright Act The law relating to copyright is contained in the Copyright Act, 1957. It extends to the whole of India and came into force on January 21, 1958. The Act has been amended in 1983, 1984, 1992 and 1994 primarily to bring the Indian law in conformity with the international conventions in general and Bern Convention and the Universal Copyright Convention in particular. Secs.44 to 50 deal with the registration of copyright. Sec.44 provides for a Register of copyright to be kept in the copyright office. The names or titles of the works, the names and addresses of authors, publishers and owners of copyright and certain other prescribed particulars are entered in the Register. Copyright is a form of intellectual property which gives the creator of an original work exclusive rights for a certain time period in relation to that work, including its publication, distribution and adaptation; after which time the work is said to enter the public domain. Copyright applies to any expressible form of an idea or information that is substantive and discrete. Some jurisdictions also recognize "moral rights" of the creator of a work, such as the right to be credited for the work. Copyright has been internationally standardized, lasting between fifty to a hundred years from the authors death, or a finite period for anonymous or corporate authorship. It is enforceable as a civil matter.

(b)

Pledge

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Sec.172, defines a pledge as the bailment of goods as security for payment of a debt or performance of a promise. The person, who delivers the goods as security, is called the pledgor and the person to whom the goods are so delivered is called the pledgee. The ownership remains with the pledgor. It is only a qualified property that passes to the pledgee. He acquires a special property, and lien which is not of ordinary nature and so long as his loan is not repaid, no other creditor or authority can take away the goods or its price. Thus, in Bank of Bihar v. State of Bihar and Ors. (1971) Company Cases 591, where sugar pledged with the Bank was seized by the Government of Bihar, the Court ordered the State Government of Bihar to reimburse the bank for such amount as the Bank in the ordinary course would have realised by the sale of sugar seized. A pledge is created only when the goods are delivered by the borrower to the lender or to someone on his behalf with the intention of their being treated as security against the advance. Delivery of goods may, however, be actual or constructive. It is constructive delivery where the key of a godown (in which the goods are kept) or documents of title to the goods are delivered. The owner of the goods can create a valid pledge by transferring to the creditor the documents of title relating to the goods.

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